Vontobel Asset Management Inc Vontobel Asset Management Investment

Vontobel Asset Management, Inc. Vontobel Asset Management & Investment Funds Emerging Markets: Good Buy or Goodbye? Referent: Rajiv Jain, Portfolio Manager International Managing Director, Vontobel Asset Management, Inc. , New York 1

Vontobel Asset Management, Inc. Emerging Markets So far on passing lane Source: HANDELSBLATT, 11/11/2005, p. 39 2

Vontobel Asset Management, Inc. Solid macro data as safeguard against volatility? Excerpted from: “The Continuing Case for Emerging Markets, Revisited” Everest Capital, February 2005 3

Vontobel Asset Management, Inc. Leading productivity Emerging Markets offer some of the most productive corporations on the basis of Ro. E Source: Bernstein Research and Everest Capital, February 2005 4

Vontobel Asset Management, Inc. Asia More and more independent of global economy 5

Vontobel Asset Management, Inc. Low Correlation Good Diversification Source: Bloomberg, Monthly Data for MSCI and IFC Indices, Gross Total Returns in USD 12/31/98 - 12/31/2004 6

Vontobel Asset Management, Inc. China Real GDP Growth vs. Total Return of the Market The real GDP growth compounded 9% in China relative to a stock market return of -2%!! Sources: Real GDP Growth from IMF: Directions of Trade, years before 1999 and World Bank Data, years 2000 -2004. Total Return Index (USD) from Fact. Set Aggregates. 7

Vontobel Asset Management, Inc. India Real GDP Growth vs. Total Return of the Market The real GDP growth compounded 6% relative to a USD return of 8%. Sources: Real GDP Growth from IMF: Directions of Trade, years before 1999 and World Bank Data, years 2000 -2004. Total Return Index (USD) from Fact. Set Aggregates. 8

Vontobel Asset Management, Inc. South Korea Real GDP Growth vs. Total Return of the Market The real GDP growth compounde d 7% relative to a USD return of 3%. Sources: Real GDP Growth from IMF: Directions of Trade, years before 1999 and World Bank Data, years 2000 -2004. Total Return Index (USD) from Fact. Set Aggregates. 9

Vontobel Asset Management, Inc. China Valuations and Earnings growth matter Sources: Real GDP Growth from IMF: Directions of Trade, years before 1999 and World Bank Data, years 2000 -2004. Total Return Index (USD) and valuation from Fact. Set 10 Aggregates.

Vontobel Asset Management, Inc. India Valuations and Earnings growth matter Sources: Real GDP Growth from IMF: Directions of Trade, years before 1999 and World Bank Data, years 2000 -2004. Total Return Index (USD) and valuation from Fact. Set Aggregates. 11

Vontobel Asset Management, Inc. South Korea Valuations and Earnings growth matter Sources: Real GDP Growth from IMF: Directions of Trade, years before 1999 and World Bank Data, years 2000 -2004. Total Return Index (USD) and valuation from Fact. Set Aggregates. 12

Vontobel Asset Management, Inc. Market Valuations Dividend Yields Over Last 20 Years 5. 00 Asia/Pacific ex Japan World Japan 4. 50 4. 00 3. 50 3. 00 2. 50 2. 00 1. 50 1. 00 4 -0 3 -0 N ov ov 2 -0 N 1 ov -0 N 0 -0 N ov ov 9 -9 N 8 ov -9 N 7 -9 N ov ov 6 -9 N 5 ov -9 N 4 ov -9 N 3 ov -9 N 2 ov -9 N 1 -9 N ov ov 0 -9 N 9 ov -8 N 8 ov -8 N 7 ov -8 N ov N N ov -8 5 0. 00 6 0. 50 Source: Fact. Set Aggregates 13

Vontobel Asset Management, Inc. Selected stocks Examples 14

Vontobel Asset Management, Inc. Unilever Indonesia EPS Growth Positively Correlates with Price Performance Sources: Real GDP Growth from IMF: Directions of Trade, years before 1999 and World Bank Data, years 2000 -2004. Total Return Index (USD) and valuation from Fact. Set Aggregates. 15

Vontobel Asset Management, Inc. Lotte Confectionary EPS Growth Positively Correlates with Price Performance Sources: Real GDP Growth from IMF: Directions of Trade, years before 1999 and World Bank Data, years 2000 -2004. Total Return Index (USD) and valuation from Fact. Set Aggregates. 16

Vontobel Asset Management, Inc. Hero Honda Motors EPS Growth Positively Correlates with Price Performance Source: Fact. Set; as of Nov. 30, 2005. 17

Vontobel Asset Management, Inc. Grupo Modelo Mexico • Founded in 1925, Grupo Modelo is the leader in the production, distribution, and sale of beer in Mexico (over 60% market share). • Brands: Corona, Negra Modelo, Pacifico and more. • Exclusive Mexican importer and distributor of Anheuser-Busch beers (Budweiser, Bud Light). • Anheuser-Busch owns about 50% of Grupo Modelo. • Sales growth of 8% annually over last 10 years. • Operating margin >20%, ROE >10%; No long term debt. • Dividend yield of 3%. • Forward P/E of 16 x. • Market Cap: $US 10. 5 bn. As of 9/26/05 18

Vontobel Asset Management, Inc. Grupo Modelo 19

Vontobel Asset Management, Inc. Growth vs. Value Our Definition Classical Growth = High Prices, High Earning Growth "Looser" High Prices, Low Earnings Growth "Stars" High Earnings Growth, Low Prices Classical Value = Low Prices, Low Earnings Growth 20

Vontobel Asset Management, Inc. Attractive Growth and Undervaluation 21

Vontobel Asset Management, Inc. Investment Process 22

Vontobel Asset Management, Inc. Vontobel Fund - Emerging Markets Equity Performance as of 12/31/2005 Rating as of 12/31/2005 23

Vontobel Asset Management, Inc. Emerging Markets Equity Up/Down Market Analysis, ending December 2005 24

Vontobel Asset Management, Inc. Equity Funds Emerging Markets global Return-Risk-Spread sheet last 3 years 25

Vontobel Asset Management, Inc. Vontobel Fund - Far East Equity Performance as of 12/30/2005 Rating as of 12/31/2005 26

Vontobel Asset Management, Inc. Far East Equity Up/Down Market Analysis, ending December 2005 27

Vontobel Asset Management, Inc. Equity Funds Far East ex Japan Return-Risk-Spread sheet last 3 years 28

Vontobel Asset Management, Inc. Outlook Don’t expect to see a break in flows until bad things happen 29

Vontobel Asset Management, Inc. Sector Winners: Energy, Materials and Technology Trend going on? 30

Vontobel Asset Management, Inc. ROE of Energy and Materials stocks Peaking? 31

Vontobel Asset Management, Inc. Conclusions Positive: • • • Still attractive valuations absolutely, historically and relatively High productivity Solid macro data Asia: More and more independent of US economy Low Correlation - Good Diversification Negative: • • • Negative growth surprise Exogenous shock (bird flu, terrorism) Optimism relative to Emerging Markets is probably peaking Earnings and productivity at record levels High oil price and rising interest rates EM are an essential element of a Global Equity Portfolio Outperformance by Buying Quality in Emerging Markets! 32

Vontobel Asset Management, Inc. Thank you for your attention! 33